:max_bytes(150000):strip_icc()/GettyImages-1971087848-182ebabcc6bf42eb87542315b84ef375.jpg "Why Levi Strauss Stock is Tumbling Friday Despite Solid Earnings")
:max_bytes(150000):strip_icc():format(jpeg)/GettyImages-1971087848-182ebabcc6bf42eb87542315b84ef375.jpg)
Key Takeaways
- Levi Strauss warned that tariffs will negatively affect its results in the fourth quarter.
- The jeans maker said fourth-quarter gross margin would fall and issued a projection for adjusted earnings per share that came in below Wall Street forecasts.
- The outlook offset solid third-quarter results on the top and bottom lines.
Levi Strauss (LEVI) shares dropped as the jeans maker gave a muted current-quarter outlook because of the impact of tariffs.
CFO Harmit Singh told analysts on the company’s third-quarter earnings call that management expects a 100 basis point drop in fourth-quarter gross margin because of the new duties and the effect of a 53rd week in the year, according to a transcript provided by AlphaSense. In addition, the firm sees adjusted earnings per share (EPS) of $0.36 to $0.38, while analysts surveyed by Visible Alpha were anticipating $0.41.
The guidance offset a strong third-quarter financial report. Levi Strauss posted adjusted EPS of $0.34, with revenue increasing 7% to $1.54 billion. Both exceeded estimates.
Why This Matters to You
Higher tariffs could translate into more expensive Levi’s jeans and other apparel as the company faces margin pressure. While sales remain strong globally, shoppers may notice prices holding steady or rising slightly as Levi manages higher costs.
Sales were up 6% to $806 million in the Americas, 5% to $426 million in Europe, and 12% to $278 million in Asia. Beyond Yoga sales added 2% to $33 million.
The company also boosted its full-year forecasts for adjusted EPS to a range of $1.27 to $1.32 from $1.25 to $1.30, and revenue growth to 3% from 1% to 2%.
Shares of Levi Strauss were down 12% in recent trading but have added 25% year-to-date.
